Bangladesh Bank Governor rules out printing money to bail out troubled banks

Bangladesh Bank Governor Dr. Ahsan H. Mansur firmly stated that the central bank will not print new money to provide liquidity support to troubled banks, emphasizing the risks such a move would pose to inflation.

Speaking at a press conference following the ‍‍`Bangladesh Bank’s Bankers Meeting‍‍` held at the central bank headquarters on Wednesday, Dr. Mansur clarified that any liquidity assistance to struggling banks would instead come through an inter-bank money supply system, with the central bank acting as a guarantor.

“We cannot allow the entire banking sector to suffer because of issues in eight troubled banks. In the interest of depositors, we intend to offer limited liquidity support,” Dr. Mansur explained.

He highlighted that a significant amount of money has been laundered out of the country through these eight banks, leading to their current liquidity crisis.

However, he cautioned that fully bailing out these banks would require an estimated Taka 2 lakh crore, a move that could drastically exacerbate inflation.

Dr. Mansur assured depositors that their interests would be protected, urging them not to panic or withdraw all their funds at once. “Withdraw only what you need. Give us some time, and we are confident the banks will recover,” he appealed.

He further noted that these eight banks have been facing problems for a long time, and their depositors were likely aware of the risks. “I want to make it clear that the entire banking sector will not be compromised because of these seven to eight banks,” he reiterated.

Senior officials, including Deputy Governors, were also present at the meeting.